Paying is the problem

By ERNEST F. HOLLINGS, former U. S. senator


Hollings

MARCH 4, 2013 -- I always learn from David Ignatius's columns. But his column "A Political DUI" in the Washington Post (2/26/13) needs amending. Ignatius writes: "We have a political system that is the equivalent of a drunk driver. The primary culprits are the House Republicans. They are so intoxicated with their own ideology that they are ready to drive the nation's car off the road… I'm no fan of the way President Obama has handled the fiscal crisis… He needs to provide the Presidential leadership that guides Congress…toward a balanced program of cuts in Social Security and Medicare and modest increases in revenue."

First, the Republicans are not intoxicated with ideology but politics. If they were fiscally conservative, they would have paid for government during the eight years of President George W. Bush (2001-2009). Instead, Congressman Boehner and Cantor voted for Bush's tax cuts, wars, prescription drugs, stimulations and bailouts - adding $5 trillion to the national debt. It took the United States 200 years to attain a national debt of $1 trillion in 1981. Now, the Republicans have increased the debt a thousand years of national debt and call themselves "conservative".

They made no effort to pay for the government when Bush was in, but as soon as Obama became President, they want to pay for government with spending cuts. Where is their $5 trillion in cuts to get us back to the balanced budget we had in 2001? Or, running $1 trillion deficits each year, where is the Republican $1 trillion in spending cuts? Ever since Grover Norquist got the Republicans to pledge against taxes, the Republicans have practiced the politics of spending cuts - no taxes. In 1993, when we Democrats cut spending $250 billion and increased taxes $250 billion, we couldn't get a single Republican vote in the House or the Senate to pay for government. The Republicans call themselves conservative but they have no idea of paying for government. Speaker Boehner keeps saying: "The problem is spending." The problem is not spending, but paying for government.

"A 7 percent VAT for 2012 would have produced $922.5 billion. This tax cut closes all loopholes, provides instant tax reform, provides billions to stop the borrowing and pay for government and releases almost $2 trillion dollars in offshore profits for Corporate America to repatriate tax free and create millions of jobs."

-- Hollings

Like all in Washington, Ignatius asks President Obama to lead. The typical African American in the U.S. with the black experience knows one thing i.e. how to work politics. Barack Obama has been raised in a white culture and doesn't know how to work politics. He attended the best High School in Hawaii, Columbia University and Harvard Law and he knows how to lead intellectually - but not politically. He learned how to campaign and came to the Presidency with no experience in governing. He spent most of his first term campaigning. It worked, so now he campaigns for his policies.

Ignatius was right when he called for President Obama to increase revenues in Medicare. But once and for all Social Security has nothing to do with paying for government or the $1 trillion deficits. Section 13.301 of the Budget Act provides that the Social Security Trust Fund "shall not be counted as new budget authority, outlays, receipts or deficit or surplus..."

The President or Congress is forbidden to include Social Security Trust Funds when paying for general government. The Congressional Budget Office finds the Social Security Trust Fund sound until 2033. We balanced Social Security's budget when it needed to be balanced in 1983 -not earlier. It's always good to anticipate needs but needs never should be used to obscure the responsibility of paying for government. Every Mayor, every Governor pays for government from year to year to avoid losing their credit rating. But Mayors and Governors when they get to Washington suddenly become economists and start playing for growth. As long as the economy needs growth, there is no need to cut spending or increase taxes before the next election. Just submit ten year plans to cut trillions but for later Congresses to do the cutting.

Apparently Ignatius had in mind the need for growth when he called for "modest increases in revenue". The CBO assumes the sequester when it estimates the 2013 deficit will be $845 billion. We haven't run any deficits in excess of $403.6 billion until Presidents Bush and Obama. We've borrowed and stimulated the economy $10 trillion in twelve years. Now, we've got to start paying. It will take substantial increases, rather than "moderate increases", in revenue. Replacing the 35 percent Corporate Income Tax with a 7 percent Value Added Tax is a good start of paying. The 2012 Corporate Tax is estimated by CBO to produce revenues of $236.8 billion. A 7 percent VAT for 2012 would have produced $922.5 billion. This tax cut closes all loopholes, provides instant tax reform, provides billions to stop the borrowing and pay for government and releases almost $2 trillion dollars in offshore profits for Corporate America to repatriate tax free and create millions of jobs.

Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of Making Government Work (University of South Carolina Press, 2008).

© 2013, Ernest F. Hollings. All rights reserved. Contact us for republication permission.

About Fritz Hollings

Ernest F. Hollings served the public for 56 years -- 38 years in the United States Senate and as South Carolina's governor, lieutenant governor and a member of the S.C. House of Representatives.

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